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Grainger (GWW) Gains on Strong End-Market Demand, Cost Cuts
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W.W. Grainger, Inc. (GWW - Free Report) is poised to gain from solid growth in core, non-pandemic products volume and strong momentum in the High-Touch Solutions and Endless Assortment segments. Efforts to strengthen customer relationships and investments in growth initiatives continue to aid growth. Benefits from price realization and cost-reduction actions support margins.
Recovery in Non-Pandemic Product Volumes
In the High Touch Solutions North America (N.A) segment, Grainger is witnessing revenue growth in nearly all the end markets. The upside is driven by double-digit revenue growth across all of the company’s North American regions and expansion in large and midsize customers. The Endless Assortment segment gains from strong customer addition at Zoro and MonotaRO business.
Grainger projects current-year net sales to be between $14.5 billion and $14.9 billion. In 2021, the company reported sales of $13 billion. The company expects total daily sales growth between 11% and 14%. GWW’s earnings per share guidance of $25.00-$27.00 indicates year-over-year growth of 30% at the midpoint. The Zacks Consensus Estimate for Grainger’s current-year earnings is pegged at $26.29, suggesting year-over-year growth of 32.5%.
Grainger is investing in the non-pandemic product inventory and partnering with suppliers to mitigate supply-related challenges, inbound lead time challenges and possible cost increases. The company saw strong growth in non-pandemic product sales as the U.S. economy recovered. Its product mix is stabilizing as customers return to more normal operations. GWW’s margin will continue to gain traction from improved pandemic product mix, pricing actions and its ability to navigate supply chain challenges.
Strong Customer Relationships, Investment in E-Commerce
Grainger’s High-Touch Solutions market continues to outpace the U.S. maintenance, repair and operating (MRO) market, supported by the continued traction of its growth initiatives. In the first quarter of 2022, this market exceeded the U.S. MRO market by 550 basis points (bps) from the prior year’s levels. For 2022, Grainger expects this market to increase between 14.9% and 15.5%, suggesting an increase of 300-400 bps from the estimated U.S. MRO market growth of 4-7%. Strategic activities such as building advantaged MRO solutions, delivering unparalleled customer service and offering differentiated sales and services will aid growth.
Grainger is focused on improving the end-to-end customer experience by investing in its e-commerce and digital capabilities and executing improvement initiatives within the supply chain. The company continues to develop online capabilities that promote a personalized, relevant, effortless experience for each customer through Grainger.com, eProcurement connections, 1 solutions and mobile applications.
Price Performance
Grainger’s shares have lost 11% in the past six months compared with the industry’s decline of 31.5%.
Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.
Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 8% in the past six months.
Myers Industries has an expected earnings growth rate of 67% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 27% in the past 60 days.
MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have risen 25% over the last six months.
Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings rose 4.2% in the past 60 days.
PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have risen 16% in the past six months.
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Grainger (GWW) Gains on Strong End-Market Demand, Cost Cuts
W.W. Grainger, Inc. (GWW - Free Report) is poised to gain from solid growth in core, non-pandemic products volume and strong momentum in the High-Touch Solutions and Endless Assortment segments. Efforts to strengthen customer relationships and investments in growth initiatives continue to aid growth. Benefits from price realization and cost-reduction actions support margins.
Recovery in Non-Pandemic Product Volumes
In the High Touch Solutions North America (N.A) segment, Grainger is witnessing revenue growth in nearly all the end markets. The upside is driven by double-digit revenue growth across all of the company’s North American regions and expansion in large and midsize customers. The Endless Assortment segment gains from strong customer addition at Zoro and MonotaRO business.
Grainger projects current-year net sales to be between $14.5 billion and $14.9 billion. In 2021, the company reported sales of $13 billion. The company expects total daily sales growth between 11% and 14%. GWW’s earnings per share guidance of $25.00-$27.00 indicates year-over-year growth of 30% at the midpoint. The Zacks Consensus Estimate for Grainger’s current-year earnings is pegged at $26.29, suggesting year-over-year growth of 32.5%.
Grainger is investing in the non-pandemic product inventory and partnering with suppliers to mitigate supply-related challenges, inbound lead time challenges and possible cost increases. The company saw strong growth in non-pandemic product sales as the U.S. economy recovered. Its product mix is stabilizing as customers return to more normal operations. GWW’s margin will continue to gain traction from improved pandemic product mix, pricing actions and its ability to navigate supply chain challenges.
Strong Customer Relationships, Investment in E-Commerce
Grainger’s High-Touch Solutions market continues to outpace the U.S. maintenance, repair and operating (MRO) market, supported by the continued traction of its growth initiatives. In the first quarter of 2022, this market exceeded the U.S. MRO market by 550 basis points (bps) from the prior year’s levels. For 2022, Grainger expects this market to increase between 14.9% and 15.5%, suggesting an increase of 300-400 bps from the estimated U.S. MRO market growth of 4-7%. Strategic activities such as building advantaged MRO solutions, delivering unparalleled customer service and offering differentiated sales and services will aid growth.
Grainger is focused on improving the end-to-end customer experience by investing in its e-commerce and digital capabilities and executing improvement initiatives within the supply chain. The company continues to develop online capabilities that promote a personalized, relevant, effortless experience for each customer through Grainger.com, eProcurement connections, 1 solutions and mobile applications.
Price Performance
Grainger’s shares have lost 11% in the past six months compared with the industry’s decline of 31.5%.
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Zacks Rank and Other Stocks to Consider
Grainger currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Industrial Products sector are Graphic Packaging Holding Company (GPK - Free Report) , Myers Industries (MYE - Free Report) and Packaging Corporation of America (PKG - Free Report) . While GPK & MYE flaunt a Zacks Rank #1 (Strong Buy), PKG carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.
Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 8% in the past six months.
Myers Industries has an expected earnings growth rate of 67% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 27% in the past 60 days.
MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have risen 25% over the last six months.
Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings rose 4.2% in the past 60 days.
PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have risen 16% in the past six months.